GMO Labeling: A Case of Asymmetric Information and the "Nudge"

  • Katherine Hartman
Keywords: genetically modified organisms, GMO, labeling, asymmetric information, nudge, singaling, market failure, behavioral economics

Abstract

From their introduction in the late 1990s, foods containing genetically modified organisms (GMOs) have sparked debate among advocates and policymakers. To correct information asymmetry inherent in the current system of selling genetically modified (GM) and non-GM foods alongside each other with no consistent signal of quality across food products, many have suggested—and the European Union and Japan have implemented—labeling regimes. This paper takes the position that consumers’ empirically supported desire (for reasons ranging from nutritional to religious) to avoid GM goods substantiates a market failure resolvable through information provision. Then, it examines labeling through Akerlof’s “Lemons” model and the behaviorist concept of the “nudge.” It concludes that mandatory labeling would maximize social welfare, enabling informed purchasing for all consumers (not only those who shop at more expensive grocers initiating private labeling). Finally, the paper discusses labeling regime implementation—including label design, product purity baseline setting, administration, and consequences.

Author Biography

Katherine Hartman

Katherine Hartman is a second year student in the George Washington University’s Master of Public Administration program. She has worked in the statistical and science policy branch of White House Office of Management and Budget’s Office of Information and Regulatory Affairs, as well as the George Washington Institute of Public Policy and the Consumer Financial Protection Bureau, during her graduate career. On campus, Katherine has served as the Trachtenberg Student Organization’s professional development co-chair and co-founder of the Women’s Leadership Fellows program. She plans to work in federal management consulting after graduation.

The author thanks Dr. Gerald Brock, for whose course she wrote this paper and who encouraged her to submit her draft to Policy Perspectives. She also thanks Dr. Stephanie Riegg Cellini, in whose class she first encountered GMO labeling, as well as her responsive faculty reviewer (and fellow Maroon) Dr. Marvin Phaup. On the Policy Perspectives editorial team, the author thanks Laura Saltzman, her thoughtful editor, as well as Editor-in-Chief Brandon Kruse and Managing Editor Tanya Harris Joshua for their dedication and guidance. On a personal note, the author thanks her mentors at GWIPP, OMB, and the Trachtenberg School of Public Policy and Public Administration for their active encouragement, as well as the patient friends who continue to associate with her despite innumerable conversations about food. Finally, the author thanks her wonderful family, who have given her the greatest unconditional love and support for which a person could wish—and muddled through the many difficult culinary experiences to which she has subjected them from early childhood.

Published
2014-04-28
Section
Articles